Leading UK market experts say no good options regarding interest rate

LEADING market analysts at CMC Markets hardly predicted a wave of cheerful news after UK inflation failed to fall as low as hoped.

The latest Ofgem price cap changed little for household bills, they pointed out, but the end of the two government schemes helped to lower inflation.

Experts at CMC, a leading global provider of online financial trading and institutional technology solutions, foresaw a further squeeze on consumers and a possible rise in the base rate.

Nor did they rule out a recession like Germany’s, with reduced household and business expenditure, reduced demand for debt, and a rise in unemployment.

“We already know from the Kantar grocery numbers earlier that food inflation is slowing down. In May, it came in at 17.2 per cent, but the process looks increasingly glacial,” said Michael Hewson, CMC Markets’ chief market analyst.

“For now, the central bank is in the invidious position of having no good options,” he declared.

“Do nothing and inflation will take longer to work its way out of the system, squeezing consumers further.  Raise by 0.25 percentage points to show they are trying to do something,” Hewson commented. “Or be more aggressive and push the economy into recession.”